UNIVERSITE DE RENNES I
IRISA
Laboratoire Informatique
d‘ organisation
- "ME DOC" model -
A syetem dynamic approach of the Bordeaux red wine market
by Louis BRETON
SUMMARY
To introduce system dynamic approach into interprofessional
organisation to built a model about agricultural market is
not so original, That's more interesting is the use of system
dynamic to define what information system must be not only
designed but scheduled to regulate the market,
Since July 1979, NEDOC gives some useful informations to
people who have the difficult challenge to follow the Hordeaux
wines market,
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MEDOC MODEL
(A system dynamic approach of the Bordeaux red wines market)
Since 1962 by JARNAIN (1), 1967 by RAULERSON (2), the system
dynamic approach is applied on agro-industry market, speciall;
in US'citrus fruits sector. In France, this type of reséarch
was initialized by F, GUILLON (3) with a study about potatocs
market (1975) and oné another about chicken market (1976), and
©, MARCANT (1) followed in 1979. with a thesis about Languedoc
ordinary red wine market.
‘In 1973 even in United States newspapers, in spite of Watergai
the Bordeaux price boom was noted with an evident displeasure,
Thie crisis obliged all the Bordeaux market partners to rein-
force an interprofessional organization, the "Conseil inter-
professionnel des Vins de Bordeaux", (C.I.V.B.) to try to
regulate the market.
From 1973 to 1978, CIVB is trying to built an information
system about wine production by area (NEVOC, SAINT-EMILION
for exemplo) or by title (Bordeaux supériour), about tran-
sactions, and about consumer's attitude, Nut this information
system was unable to explain fluctuation waves. Since Septem-~
ber 1978, system dynamic thinking is introduced in CIVB
Economic Office to try to understand the problem.
Vinification
and aging
Receptance
rate
Productions
stock forpale
Nerehants
supply rate
Distribution
rate
Distribution
, stock
| Comeae ee!
supply rate
Consumers 9%
’ \
, Merchants 4
or ceaptean |r
CAMPAIGN price
schéma N
« Femune ration |)
3
2
I - Some precisions about Bordeaux red wines market
Bordeaux red wines have a peculiarity. It's necessary to wait
the second year after the wintage to bottle them and it's
better to wait again before to drink of course, A such pecn~
laarity is sufficient to explain the real fastening degree
of the spot market, To penetrate into, only one solution, to
buy a Bordeaux wines merchant, That's the solution choiced
by the main distribution firms to get vivification and aging
know-how,
*
In front 300 wines merchants but Jess tuan
40 represent 80 % of the purchi
Viticulturists are 25 000 but 5 0UU represent more than 6U
of the production,
es and among them 12 are t.
or English groupds. Cooperative movement produces 30 % of
wines, but it's not in conflict with wines merchants who con-
mercialize also this production. Nevertheless 30 % of the
production,are sold directly by producers, specially since
1973-1974 ¢risis.
One another partner in Bordeaux wines market is the broi
re
He is the oid information system between producer and merchan
That's a.long.time he was runwing cellars to found.and taste
wines and to confront supply and demand. Now it's finish, les:
thm ten brokers deal with 80 % of the wine business by phere,
In France, wine competitors are "Cétes du Rhéne” and ever
"Corbiéres", but only when the final price of Bordeaux generis
ds clambing up $ 2.25 ($1 = 5 F) the 0,75 1 bottle, that's th:
situation when productor's price is below $ 0.80 for 1 litre
not bottled.
At this price level, for the vintage Bordeaux goneric, nation.
and international market 4s around 600 000 hl ; that's the
annual production mean, For all the Bordeaux red wines the
Production is 2 500 000 hi versus'1 000 000 for all the
Bordeaux white wines,
DYNAMIC UF THE BORDEAUX WINE PRICE BEHAVIOUR
achéma N°2
Production Producers! Merchants!
cost capital denand
remuneration
objective
“Producers! Producers’ Merchants?
financial sales financial
capacity capacity
Merchants
capital
remuneration
objectiv:
Producers’ Producers? Distributions
supply stock cost
Vintage
Herchanta®
sales
Merchants’
selling
prico
323
trouble 7
II ~ Wh
For a vintage, the campaign price is given after a bargain
between producers and merchants, under CIVB authority, two
or three months after the vintage date.
What are the availablo informations at this moment 7
- Vintage
~ Producer's stock lovel
- Merchant's stock level
~ Transactions of the last campaign
Concumption evolution in France, elcium, England by pane)
- Exportations evolution by country
Nawerune
1
= Vintages of competitors.
Scheme h® 1 using system dynamic tool presents the structural
analysis of the campaign price fixisting system and scheme n°2
the behaviour of this system,
As the lecturer can see, it was difficult to CIVB to facilitat
the bargain between producers and merchants because CIVH had
no informations about financial aspects of the question.
Our own research explains Bordeaux red wines prices waves by
the introduction of such variable and with only stock level,
vintage, and merchants financial. capacity we are able in MELOC
model (MEDOC for "Modale Economique D'Organisation Concertée)
to retrieve the past evolution and,since 1979,to give a good
idea of the campaign price level.
III - The future
MEDOC model is now developped not only for the short range
but also for middle and long range because it's necessary when
we work with perennial production around 50 years, Especially
during the twelve last years, a large part of Bordeaux white
vineyards is changed on red wine without studies about middle
range evolution of the consumption, That's a difficult question
We hope to explain our solution on october 1981 in Rensselarvil
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